Dive Brief:
- The New York Building Congress, in its New York City "2018-2020 Construction Outlook" report, has predicted that construction activity in the city will reach a record-setting $61.8 billion in 2018, a 25% increase from 2017. The organization also projected that spending for the three-year period would reach $177 billion, with 2019 and 2020 spending levels at $59.3 billion and $56.4 billion, respectively.
- The NYBC expects building activity to increase in all sectors, with nonresidential spending in office, institutional, government, sports and entertainment, and hotel categories to hit $39 billion in 2018 — a roughly 66% increase from 2017's $23.5 billion. Public works and government infrastructure spending is projected to reach $19.5 billion this year, a 32% increase from 2017, and $24 billion at the end of 2020. The organization estimated residential construction activity will also increase this year to $14 billion, up from $13.2 billion in 2017, before decreasing to $10.6 billion in 2020. Construction employment, while set to increase to 158,000 this year, is expected to decrease to 145,600 in 2019 and then rise again in 2020 to reach 147,700.
- To ensure continued growth, the organization's recommendations includes immediate funding of the Hudson River tunnel project to keep the region's economy moving along, passage of a national infrastructure plan, funding of the Metropolitan Transportation Authority's five-year capital plan, New York City zoning that promotes neighborhood development and economic opportunity, continued strategies regarding climate change and resiliency, innovation to lower costs and speed up project delivery, and increased minority- and woman-owned business participation.
Dive Insight:
While New York City is still in the throes of a building boom, the U.S. as a whole has seen some moderation in construction activity. According to the most recent report from Dodge Data & Analytics, September saw the value of construction starts fall 5% from August to $709.6 billion. This follows 9% month-over-month drops in both July and August.
However, as Dodge's chief economist, Robert A. Murray, pointed out in an accompanying analysis, monthly data is subject to swings from large projects like massive energy facilities, skyscrapers or major sports venues. Murray said a better measure of industry health is quarterly data, which indicates that construction starts have held steady since the last quarter of 2017 with ups and downs in the interim.
Murray said it's too soon to report whether the construction industry is on a downturn as economic growth is still strong, bank lending requirements have eased a bit and commercial real estate fundamentals remain healthy.
